The Covariance Can Be Negative but the Coefficient of Correlation

question 147

True/False

The covariance can be negative but the coefficient of correlation cannot.

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Definitions:

Coupon Rate

This rate is the yearly percentage of interest that a bond yields, calculated as a percentage of the bond's principal amount.

Capital Gains Yield

The price appreciation component of the total return on an investment, excluding any dividends or interest.

Annual Coupon

The yearly interest payment made to bondholders, based on the bond's face value.

Yield to Maturity

The total return expected on a bond if it is held until the date it matures.